Kenyans’ uptake of insurance cover remains mostly in the motor, fire industrial and personal accident classes. This illustrates a poor attitude towards personal or life insurance cover in general. Low penetration of insurance in the Kenyan market is attributable to the following factors:
- A general lack of a savings habit among Kenyans;
- Low incomes for the majority of the population, with close to 50% of Kenyans living below the poverty line
- Inadequate tax incentives that could encourage the middle classes to purchase life insurance products
- A perceived crisis of the industry in the eyes of the public with regard to settlement of claims.
Several legislative and taxation changes made in recent years have made an impact on the Kenyan insurance industry and they include; increase in the minimum capital requirements for insurers, increase in the solvency margin for long term insurers, introduction of ‘cash and carry’ rules which will require that insurers assume risk upon receipt of the premium, relaxation of investment limits for general insurers, introduction of penalties on late settlement claims, change in the rules on taxation of long term insurance business and taxation of dividend income earned by a financial institution.
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